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Why Covid is positive for e-commerce

Waheed Abbas/Dubai
Filed on June 1, 2020 | Last updated on June 1, 2020 at 08.38 am
ClickPost noted that cash-on-delivery will see reduction in the UAE and the Middle East region on a long-term basis as more people will resort to digital payments. -Reuters

Tax-free shopping can woo back customers to UAE shopping malls.

Covid-free certification and initiatives such as tax-free shopping will help the malls across the UAE to woo back shoppers as the exponential growth of e-commerce is taking a toll on the brick-and-mortar retail sector, according to new studies released on Saturday.

In addition, testing every visitor prior to entering the shopping mall and increased popularity of touchless shopping experiences with self-checkouts will also benefit the shopping malls in the country, said researchers of Dubai Future Research, an initiative by the Dubai Future Foundation (DFF). They projected that shoppers will return to the malls but not at the same levels as before because online habits would become more routine among the consumers.

"As consumers avoid shopping malls in response to Covid-19 crisis, online retailers and e-commerce platforms are poised for growth. The pandemic is accelerating retailers' plans for digital transformation, but not all retail businesses are able to move online rapidly, offering scope or governments and e-commerce platforms to step in with support," DFF said in its post-Covid-19 report.

According to Dubai CommerCity, e-commerce market is projected to reach Dh95.42 in billion in Middle East, Dh40.37 billion in GCC and Dh16.88 billion in the UAE.

Globally, a Unctad report said last month that e-commerce sales hit Dh94 trillion in 2018, up eight per cent from 2017. But due to the outbreak of Covid-19, this growth rate in e-commerce will mostly pick up speed this year. "The coronavirus crisis has accelerated the uptake of digital solutions, tools and services," said Shamika Sirimanne, director of technology and logistics at Unctad.


Offline retailers at risk
Dubai Future Foundation said a significant number of mainly offline retailers are at risk. "The pandemic is forcing the closure of 'bricks-and-mortar' retailers around the world as consumers switch to online shopping and this represents an urgent call to action for landlords and governments to provide a lifeline for struggling offline retailers."

Since moving business online requires significant investment from bricks-and-mortar retailers, the report suggested that retailers can be spared such expenditures if existing and new e-commerce platforms instead provide access to their products for online shoppers.

The study noted that e-commerce is not a level playing field, and a significant number of retailers remain offline. "This in turn creates an opportunity for governments to ensure that their smaller retailers with limited online presence are not left behind by providing them with an e-commerce platform of their own. Not only will this help smaller retailers survive the pandemic but it will also aid them in the long term as consumer shopping habits change," it said.

"In the short-term, banks should restructure maturing loans in the retail sector, providing a lifeline to an industry suffering with low revenues. Waived rents to retail tenants could be offered during lockdown, provided by shopping mall landlords. Employees can be reshuffled and reskilled, allowing growing sectors to manage the surge in demand, and preparing employees for new roles," the Dubai Future Foundation study said.

Logistics intelligence platform ClickPost, which recently entered the UAE and Saudi Arabia, has said that few categories such as hygiene products, laptops and accessories, personal grooming, electronics and personal fitness have seen unprecedented growth in online sales in the UAE and Middle East region.

However, it said high-value brands will have to increase discounts in the short-medium term to prevent customers from switching to other economical brands.

ClickPost noted that cash-on-delivery will see reduction in the UAE and the Middle East region on a long-term basis as more people will resort to digital payments due to Covid-19 pandemic.

Moreover, companies are reskilling their employees, moving them from offline to online operations as cashiers are being trained to perform warehouse operations like picking and packing due to changing nature of workplace and jobs.

Pranshu Kacholia, vice-president, ClickPost, said the region has observed a huge boom in e-commerce due to Covid-19 crisis. "Daily volumes of some of the largest players in April-May were 1.5 times that of January-February. We believe that the e-commerce growth rate in Middle East should be among the highest in Asia in the next 5 years... However, logistics has become a huge bottleneck in GCC," said Kacholia. - waheedabbas@khaleejtimes.com


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